Reeves promised “quid pro quo” to oil industry in return for windfall tax hike

EXCLUSIVE - Labour accused of making a “secret exchange deal” with fossil fuel giants.

Chancellor Rachel Reeves promised that major polluters would receive a “quid pro quo” if they accepted higher taxes on their windfall profits, I revealed today in The Guardian and DeSmog.

Through a Freedom of Information request, I obtained the minutes of a meeting between Reeves and Norway’s state energy company Equinor in August last year.

The minutes show that Equinor’s CEO Anders Opedal raised concerns about Labour’s proposed hike to the windfall tax – first introduced after Putin’s 2022 invasion of Ukraine handed bumper profits to oil and gas giants. Equinor made £21.2 billion in 2022 alone (after tax).

In response, the chancellor told Opedal that “Equinor should recognise the quid pro quo – the funds raised enable government investment in CCUS etc.”

CCUS – carbon capture – is the controversial practice of trapping the emissions produced by fossil fuel plants before they enter the atmosphere.

CCUS is controversial because it’s heavily supported by the oil industry, as it allows for the continued burning of planet-wrecking fossil fuels, and because it isn’t currently viable without massive government subsidies.

So, in October, just a couple of months after Reeves’s Equinor meeting, the new Labour government announced that it would be piling £22 billion into CCUS via subsidies over the next 25 years. This decision followed a surge in lobbying by fossil fuel firms.

The oil industry received its “quid pro quo”, and perhaps even sooner than it thought.

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Carla Denyer MP, co-leader of the Green Party:

“Rachel Reeves and the Labour government have been caught out making promises in a secret exchange deal which goes against the interests of the British people.

“In public they claim to be taxing fossil fuel giants more fairly by raising the windfall tax. But behind closed doors they are giving back with dodgy deals to allow the fossil fuel corporates to continue with business as usual under the guise of CCUS – an expensive distraction and largely unproven technology.”

Dr Andrew Boswell, leader of the Scrap Carbon Capture campaign:

“What an outrageous spectacle – Reeves begs Norway’s oil colossus to tax its huge profits, and then gifts it with far more in return – many billions over decades for climate-wrecking CCUS.”

Tessa Khan, executive director of Uplift:

“Oil companies, like Equinor, have held sway over successive UK governments, for years shaping policies to benefit their bottom line and slowing down climate action. This Labour government must stand up to them and put our needs – for affordable clean energy and a safe climate that we can pass on to our children – ahead of their insatiable need to profit.”

Lily-Rose Ellis, campaigner at Greenpeace UK:

“Investment in carbon capture and storage is a gamble on unproven technology. All it does is give oil and gas giants carte blanche to continue causing planet destroying emissions in the hopes that one day they might be able to capture the carbon and store it for all of eternity. Public money should be spent on renewables which guarantee to lower emissions, bring bills down, and boost the economy with new jobs.”